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Market Commentary 12/12/16

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EUR/USD – Moving Higher From Old Buy Zone

Last Friday we had just seen the market re-enter the buy zone which had caused the move up into the sell zone to take place . Today the market has moved out of this buy zone and is now inside the supply zone where I said to watch for entries short.

So far we haven’t had any signals which suggest the market is going to move down from the supply zone. A bearish pin bar formed an hour ago but it’s too early to say whether this pin has formed due to the bank traders taking profits off their trades or from them placing sell trades to make the market fall. Really what I want to see now is a large bearish engulfing candle push the market below the little swing low that formed a few hours ago ( marked with a black line ).

To me that would be a pretty good signal we are going to see the market fall down to the lows of this move higher. If we don’t see a large engulf form I would hold off placing a sell trade because there is a chance we could see the market move back up to the highs of the large drop that took place last week.

USD/JPY – Profit Taking Entering The Market

After breaking to new highs early this morning, USD/JPY is now falling due to what I believe is the bank traders taking some profits off the buy trades they got placed before the move up began last week.

It’s possible the move down we are currently seeing is the beginning of a larger move down into the buy zone which formed last week. The banks might still have some buy trades left which they were unable to get placed before the move up started last Friday, so they could be taking a little bit of profit off their trades to make the market fall to get people to put sell orders in the market.

If this drop continues into the buy zone lots of traders will be placing sell trades which means there will be plenty of sell orders available for the bank traders to use to get any of their remaining buy trades placed. Not enough price action has formed for us say whether this is going to be the case or not, but if the market breaks through the swing low marked with a black line I would keep an eye on the supply zone which has formed from today’s drop lower, as a move back up into this zone might take place before the move down into the buy zone occurs. If the market doesn’t break through the black line, then disregard the supply zone and await further price action.

AUD/USD – Sharp Move Back Into Sell Zone

Last Friday’s drop out of the sell zone continued until the market closed for the weekend on Friday night. Today after a small gap lower the market started to rise again and is now close to breaking through last weeks high.

Today’s move higher does make it seem like we are not going to see the market reverse to the downside but I wouldn’t be so quick as to say the reversal is over because we could still see the market fall over the next few hours. I think if we see the market break and close beyond last weeks high we’ll probably see more upside for the rest of the week and possibly into the week after. If we don’t see the high broken and instead the market falls back to roughly the 0.747000 level, it’s as a sign the reversal might still be taking place and you should expect more downside over the coming days.

There isn’t much we can do at the moment in terms of getting trades placed, I wouldn’t be confident going long or short with the market being where it currently is so it best to just wait for more price action to form.

Finding Supply & Demand Zones That Work!

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Why The Time It Takes For The Market To Return To A Supply Or Demand Zone Will Determine Weather The Zone Has A High Chance Of Causing A Reversal To Take Place

The Differences Between Zones Created By Bank Traders Taking Profits And Zones Created by The Bank Traders Placing Trades